London fit out report – spring 2017 survey

The London fit-out market continues to be buoyant, although the political events of 2016 and the recent General Election have slightly eased the pressure. A number of larger projects are coming to market in 2017, which is leading clients to explore more intelligent ways of positioning their project to attract more interest from the supply chain.

Inflation closed out at approximately 5% in 2016 and the future outlook is easing in terms of inflation expectations over the coming 24 months – although at a notch down from previous expectations.

Both public and private sector exhibit firm pipelines of work, with central government bringing a selection of big programmes to the market, providing repeat and sustained business opportunities. As a result, inflation within the fit-out market looks set to be approximately 4% per annum over the coming years.

5% Tender price inflation 2016

4.1% Tender price inflation 2017

3.9% Predicted tender price inflation 2018

Key trades in the supply chain

The availability of key trades in the supply chain looks to be a persistent limitation in a heated market. Often supply chains are over committed and the stretched capacity of estimating teams is affecting the quality of tender enquiries/returns, leading to trade contractors being more selective.

Insolvency remains a risk and there have been recent examples in the sector. Early involvement of consultants can pay dividends in helping clients navigate the range of options in the market.